Business for the Rule of Law Framework

We have recently heard strong arguments in the global media to end tax secrecy based on the rule of law. While exposing the negative effects of tax evasion on the rule of law, the United Nations Global Compact (UNGC) encourages respect for business and support for this “rule of law” through the B4ROL framework. The United Nations Global Compact, with the support of LexisNexis Legal & Professional, has launched a new initiative, Business for the Rule of Law (B4RoL), to engage the business community and the advocacy community in promoting the rule of law, good governance and corporate sustainability. In 2013, LexisNexis presented the Global Rule of Law Business Principles to UNITED Nations Secretary-General Ban Ki-moon to join forces and expand B4ROL`s efforts. The framework defines a three-step process. These are: We organized a consultation workshop as part of the un Global Compact`s full consultation on the Business framework for the Rule of Law, a framework of guidelines for companies to engage responsibly and sustainably in efforts to support the rule of law as part of their corporate social responsibility. Among the calls to action that emerged from the workshop for business were: Such an approach to respect for the rule of law is a challenge, as the building blocks of the norm are even less tangible than human rights. Human rights under the Guiding Principles are limited to “internationally recognized human rights”. In the context of B4ROL, the building blocks of the rule of law are unclear, leaving participants a great deal of room for manoeuvre. The aim of the Rule of Law Framework is to prevent emerging threats to the rule of law from escalating to the point where the Commission must trigger the mechanisms of Article 7 of the Treaty on European Union (TEU). This is done in the framework of a dialogue with the EU country concerned.

The framework ultimately aims to inspire businesses and other stakeholders to uphold the ten principles of the UN Global Compact and support UN goals, including development, peace and human rights. Over the past fifteen years, the focus has been on international frameworks and principles designed to help lead responsible businesses and promote action on corporate sustainability issues at the global and local levels1. These include the ten principles of the United Nations Global Compact (“United Nations Global Compact”) and the United Nations Guiding Principles on Business and Human Rights (“United Nations Guiding Principles”). Participants, who worked in plenary and focus groups, contributed in a variety of areas, including the UK domestic policy context, examples of good business support for the rule of law, the business case for compliance with the framework and actions that companies could take in the following areas: A strong rule of law is essential as a foundation for economic and social development. The Business for rule of law Framework aims to promote the rule of law by engaging responsible businesses to support the creation and strengthening of accountable legal frameworks and institutions – as a complement to, not as, a substitute for government action. Businesses can support the rule of law through core activities, strategic social investments, public engagement and collective action. The UN Global Compact has collected more than 100 case studies of entrepreneurial action in support of the rule of law, including: The concept of the rule of law proposed by B4ROL is not the same definition and prioritization of the elements that are often considered necessary for development. More importantly, although the links between the rule of law, democracy and development are becoming increasingly clear, the feasibility of methods to promote the rule of law remains controversial. The entry of companies into this swirling mix should be approached with caution. The framework provides guidance on how companies can respect and support the rule of law in a way that businesses can relate to. This includes a definition of the rule of law, the business case, practical examples and instructions to get started. The rule of law at the national and international levels is both an independent development outcome and a precursor to other outcomes.

If no solution is found within the framework of the rule of law, Article 7 TEU is the last resort to resolve a crisis and ensure that the EU country respects EU values. Article 7 TEU provides for specific mechanisms providing for far-reaching sanctions in the event that an EU country fails to respect the fundamental values referred to in Article 2 TEU, including the rule of law. Businesses are encouraged to use the Business for the Rule of Law Framework to take measures to respect and support the rule of law that complement government action. The UNPM B4RoL framework aims to promote the rule of law by engaging responsible businesses to support the creation and strengthening of responsible legal frameworks and institutions B4ROL refers to the rule of law as a vehicle for the promotion and protection of human rights. However, it does not clearly define the rule of law, although it addresses several dimensions that indicate a broad preference for formal legality while maintaining “consistency with international human rights norms and standards”. The ability of companies to support the struggling legal infrastructure of countries where there is a lack of liquidity and expertise should not be dismissed out of hand. Several major initiatives have taken place, mainly through non-profit organizations or separate umbrella organizations. However, these “support initiatives” on the part of companies must be secondary to the “respect” of the rule of law by companies. Efforts would be better focused on improving and broadening business “respect” for fair wage payments, corporate tax fairness, and efforts to align business activities with the letter and spirit of the law.

Fair tax revenues could then be used directly and democratically to create the necessary legal infrastructure. The role of the economy in this regard is to “respect” the social process. In recent years, the European Commission has been confronted with crisis events in some EU countries that have revealed systemic threats to the rule of law. The Commission has responded by adopting the Rule of Law Framework to address these threats in EU countries. “Compliance” with companies in the context includes activities such as “compliance with tax laws and policies”. This concept of “respect” is similar in many ways to the approach of the United Nations Guiding Principles on Business and Human Rights (GUIDING PRINCIPLES). As with the GUIDING PRINCIPLES, the role of the economy is to “respect” rather than “protect,” and the distinction between government and business becomes blurred as private companies begin to offer the “traditional” services of the state such as legal infrastructure, health, and education. “The rule of law is essential to promote economic growth, development, human rights and access to justice. Where the rule of law is strong, people and businesses can feel safe when it comes to investing in the future. The Rule of Law Economy Framework provides guidance to the private sector and other stakeholders.

I call on businesses of all sizes to think about what else they can do to support the rule of law and build a dignified life for all. Former UN Secretary-General Ban Ki-moon The “support” aspect focuses on voluntary measures to complement “respect”. This part of the framework describes support activities that could be carried out through core business activities, strategic social investments and philanthropy, partnerships and collective actions. The framework mentions that companies could work with others to “identify rule of law gaps and needs at the local level and join forces to take action to address them in a way that works for them.” Specific measures proposed include: The expansion of B4ROL will set new standards for businesses and raise awareness of the concept of the rule of law in the business world.